Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) Shares Fly 32% But Investors Aren't Buying For Growth

Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) shares have continued their recent momentum with a 32% gain in the last month alone. The last month tops off a massive increase of 141% in the last year.

Although its price has surged higher, Xeris Biopharma Holdings may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 2.3x, considering almost half of all companies in the Pharmaceuticals industry in the United States have P/S ratios greater than 3.3x and even P/S higher than 19x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for Xeris Biopharma Holdings

How Xeris Biopharma Holdings Has Been Performing

Recent times haven't been great for Xeris Biopharma Holdings as its revenue has been rising slower than most other companies. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Xeris Biopharma Holdings.

Is There Any Revenue Growth Forecasted For Xeris Biopharma Holdings?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Xeris Biopharma Holdings' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 55% gain to the company's top line. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 19% per annum over the next three years. Meanwhile, the rest of the industry is forecast to expand by 53% per annum, which is noticeably more attractive.

In light of this, it's understandable that Xeris Biopharma Holdings' P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Final Word

Despite Xeris Biopharma Holdings' share price climbing recently, its P/S still lags most other companies. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As expected, our analysis of Xeris Biopharma Holdings' analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

You need to take note of risks, for example - Xeris Biopharma Holdings has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.